American Telephone & Telegraph Co. v. United Computer Systems, Inc.

7 F. App'x 784
Court of Appeals for the Ninth Circuit·Decided April 16, 2001·No. No. 99-56846; D.C. No. CV-99-06080-RSWL·Published·Cited by 3 cases

Opinions

MEMORANDUM*

United Computer Systems, Inc. (UCS) timely appeals the district court’s judgment confirming an arbitral panel’s denial of its claims against AT & T and Lucent Technologies, Inc (AT & T). We have jurisdiction under 28 U.S.C. § 1291 and we affirm. Because the parties are familiar with the facts of this case, we recount them here only as necessary to explain our decision.

A. Governing Law.

The first issue we must decide is what law governs the parties’ arbitration. Under the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (FAA), parties are free to enter into contracts providing for arbitration under rules established by state law rather than under rules established by the FAA. Volt Infor. Sciences, Inc. v. Board of Trustees of the Leland Stanford Junior Univ., 489 U.S. 468, 478-79, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989); La-Pine Tech. Corp. v. Kyocera Corp., 130 F.3d 884, 889 (9th Cir.1997). The question is one of contract interpretation: whether the parties to this contract chose federal, California, or New Jersey law to govern their arbitration.

UCS asserts that AT & T and UCS “agreed to abide by California law .” This is incorrect. First, the portion of the contract cited by UCS in support of its assertion selects California as the forum state [787] for arbitration; it does not select California law as the governing law. Instead, the contract provides that any arbitration shall be “in accordance with the rules of the American Arbitration Association then in effect.” Second, the contract contains a “CONTROLLING LAW” provision stating that it “shall be construed and controlled by the laws of the State of New Jersey.”

UCS asserts that, nonetheless, California arbitration law applies because that was the intent of the parties. This argument fails as well. Other than the parties’ choice of California as the forum state, UCS submitted no evidence that the parties intended California arbitration law to govern their arbitration.

The contract between UCS and AT & T is similar to the contract reviewed by the Supreme Court in Mastrobuono v. Shear-son Lehman Hutton, Inc., 514 U.S. 52, 115 S.Ct. 1212, 131 L.Ed.2d 76 (1995), which contained a choice-of-law provision that selected New York law, and an arbitration provision stating that “any controversy” arising out of the transaction between the parties “shall be settled by arbitration” in accordance with the rules of the National Association of Securities Dealers. Id. at 59. The Supreme Court stated that the contract “should be read to give effect to all its provisions and to render them consistent with each other,” and concluded that the contractual provision choosing the law of a particular state encompasses the substantive law of that state, but does not encompass the law of that state with respect to the allocation of authority or power between the courts and the arbitrators. Id. at 63-64.

Applying Mastrobuono to this appeal, grounds for vacatur of the award are controlled by the FAA rather than New Jersey law, because a state law concerning the extent to which an arbitral award is renewable by the courts and the grounds upon which courts may vacate such an award affects the allocation of authority between courts and arbitrators. Id. at 63-64; See Wolsey, Ltd. v. Foodmaker, Inc., 144 F.3d 1205, 1212-13 (9th Cir.1998); Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir.2000).

B. The Arbitration Award.

UCS makes thirteen arguments in support of its assertion that the district court erred when it denied UCS’s motion to vacate the award. We consider each of these within the framework of section 10 of the FAA which lists the grounds that may form the basis for vacatur of an arbitration award. These grounds include proof that an award was procured by corruption, fraud or undue means, resulted from an arbitrator’s evident partiality, corruption, or misconduct which prejudiced the rights of any party, or that the arbitrators exceeded their powers. 9 U.S.C. § 10(a)(1)-(4)(2000). “[FJederal court review of arbitration awards is extremely limited. It is generally held that an arbitration award will not be set aside unless it evidences a manifest disregard for law.” A.G. Edwards & Sons, Inc. v. McCollough, 967 F.2d 1401, 1403 (9th Cir.1992) (citation and quotations omitted).

1. Costello’s prior knowledge of disputed evidentiary facts.

UCS argues that Costello’s disqualification was mandatory because he had prior personal knowledge of disputed evidentiary facts. Alternatively, UCS argues that the failure of the American Arbitration Association (AAA) to disqualify Costello because of his prior knowledge meant that the award was procured through “undue means.” The district court did not clearly err when it found that UCS had waived this objection by failing to raise it in a timely manner. See Woods v. Saturn Distrib. Corp., 78 F.3d 424, 427 [788] (9th Cir.1996). Moreover, the AAA’s denial of UCS’s request to disqualify Costello did not cause the award to be procured by undue means. See A.G. Edwards, 967 F.2d at 1403.

UCS also argues that Costello’s failure to disclose his 1991 contact with Klinger and Stanwyck constitutes a basis for vacatur. Failure to disclose information is not a ground for vacating an arbitration award under the FAA.

2. Request for Costello’s Curriculum Vitae.

UCS argues that the request for Costello’s curriculum vitae created “evident partiality” requiring vacatur under federal law. The party challenging the arbitration decision has the burden of showing partiality. Woods, 78 F.3d at 427. The integrity of the arbitrator’s decision is directly at issue in actual bias cases, where “the court must find actual bias.” Id. UCS did not carry its burden of showing that the request for Costello’s C.V. caused him to be biased in favor of AT & T.

3. Costello’s 1997 Contact with Klinger.

Free access — add to your briefcase to read the full text and ask questions with AI

American Telephone & Telegraph Co. v. United Computer Systems, Inc., 7 F. App'x 784 (9th Cir. 2001).

7 F. App'x 784 (American Telephone & Telegraph Co. v. United Computer Systems, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related